Images become Red X’s after forwarding

We are using Outlook 2003 on Win XP SP2. I have a user who takes screen prints and sends them in email. If someone replies to her the image is still there – once she replies or forwards from that point the images become red x’s. This is all being done internally and used to work fine. I haven’t been able to pinpoint when it started but I think shortly after we went to SP2. Out network guys swear they haven’t added any security policy that would cause this.

I can’t duplicate the issue myself but I have noticed that when I save an email with images as an html doc – I lose the images. I’m sure it’s all connected but I’m not sure how.